Accessible Financing with Solar System Loans

A personal loan is often the most advantageous method of financing solar panels. With fixed interest rates and unchanging monthly payments throughout the loan's duration, personal solar panel loans provide financial stability. 

Upside: Can be approved quickly often less than a week. Personal loans are unsecured so you don't need to offer your home a collateral.

Downside:  Personal loans are a great option for customers with good credit. However, if you cannot qualify for a personal loan with a fixed low interest rate then this option might not be the best choice for your project. 

If you possess substantial home equity, then exploring options like a home equity loan or a home equity line of credit (HELOC) might be worthwhile. Home equity loans function akin to personal loans, featuring fixed interest rates, predetermined repayment timelines, and consistent monthly payments. 

On the other hand, HELOCs provide a line of credit akin to a credit card, allowing you to borrow against it. However, be mindful that HELOCs usually come with a variable interest rate, resulting in potential fluctuations in your payments based on changes in your account balance and interest rate.

Upside: If you have good or great credit a home equity loan or HELOC can offer fair terms and affordable payments.

Downside: Typically home equity loans and HELOC will only allow financing up to 85% of a home's value. So if you do not have enough equity in your property this might not be the best option. 

A power purchasing agreement (PPA) has become a popular option for solar installation in recent years. A power purchase agreement is a method where instead of buying the solar system outright, a solar installation company pays for the system and installs it on your home. In return you agree to purchase the electricity produced usually for a period of between 20-30 years.

Upside: This option can be great for those that don't qualify for lower interest rates.

Downside: With power purchasing agreements you want be sure that your payments are the same or less than your current utility payments. Also, the contract can making selling your home more difficult as it will require the new buyer to take over the contract or the homeowner to pay off the system as part of the sale. 

One of the noteworthy advantages of buying a home solar system is the 30 percent tax credit provided by the federal Inflation Reduction Act for solar installations. This incentive is applicable to homeowners who purchase and install solar panels on their primary or secondary residence in the United States. Running through 2032, this credit aims to sustain the momentum of the solar shift. However, in 2033, the credit will reduce to 26 percent, followed by a further decrease to 22 percent in 2034, ultimately phasing out in 2035.

Additionally, depending on your location, you may qualify for state-sponsored tax incentives. For instance, certain states permit you to exchange surplus solar power for credits on your energy bill through net metering. In other regions, solar panels are exempt from sales tax. To explore state-specific options, the Database of State Incentives for Renewables & Efficiency serves as a valuable resource.